China to Account for More than Half of Global Imports in 2011/12
May 18, 2012 The good news for the cotton industry is that for the current season, global cotton trade is expected to jump 13% to 8.6 million tons. The unsettling news is that, if you remove China from the equation, imports by the rest of the world combined are expected to drop about 18%, to 4.2 million tons.
In total, China will account for 52% of global imports this season, thus reducing the amount of cotton available in the rest of the world this season.
US exports are dropping by 21% to 2.5 million tons due to reduced supplies, but shipments from India, Brazil and Australia could reach record levels. As a result, while stocks in China are expected to more than double to 5 million tons in 2011/12, stocks in the rest of the world will increase at a more moderate rate of 14% to 8.1 million tons.
In the northern hemisphere, 2012/13 plantings are already under way. Estimates show that global cotton area should decrease 7% to 33.6 million hectares (ha) in response to lower cotton prices, increasingly attractive alternative crops such as grains and soybeans, and rising production costs.
Assuming there are average yields, global production could decline 7% to 25.2 million tons. The decrease is largely attributable to China, which should produce a crop of 6.4 million tons (13% less than 2011/12 totals). Production is also expected to decline in many of the world’s other top producers, including India, Pakistan, Brazil and Turkey. U.S. production, on the other hand, could increase 11% to 3.8 million tons despite reduced plantings, assuming the weather cooperates and abandonment is lower than it was in 2011/12.
On the consumption side, after two seasons of decline, global cotton mill use is projected to increase by 4% to 24.1 million tons in 2012/13, driven by improving economic growth and lower cotton prices. With worldwide production exceeding consumption again, global stocks are expected to continue increasing 9% to 14.3 million tons, equating to 59% of world mill use. The projected accumulation of cotton stocks will weigh on international cotton prices in 2012/13, but the extent of this downward pressure will depend in large part on how China handles its national reserve.
GET THE NEWSLETTER TODAY!
